Simplifying Prior Authorization in the Era of Value-Based Care: Why Outsourcing is the Key

Nuances of prior authorization (PA) say it ensures appropriate care while controlling treatment costs and ensuring quality of the services.

The American Medical Association (AMA) and other various health organizations presented a consensus statement to the insurance companies, appealing to them for a change in the prior authorization process to make it smoother and less tedious for the providers.

Meanwhile, a survey conducted recently by America’s Health Insurance Plans found that 91% of large insurance plans think that prior authorization have a positive impact on care quality and affordability, confirming the idea that adding prior authorization is crucial to improving outcomes.

But with the increasing complexities in prior authorization process, providers like you are grappling with the challenges. The reformation in the care protocols and changes within the administrative aspects are tearing down the healthcare professionals elevating the chances of burnout and poor health outcomes for their patients as well.

The Role of Prior Authorization in Value-Based Care

Prior authorization helps support value-based care because such treatments, medications, and procedures would be aligned with evidence-based guidelines that are specific to VBC’s necessity of managing to improve patients’ health outcomes in terms of control cost.

Unlike the traditional fee-for-service system, where healthcare providers receive payment for each service provided, value-based care incentivizes providers to prioritize quality care that leads to better patient results and more efficient use of resources.

Payers use prior authorization as one of their tools in controlling healthcare spending, guiding providers towards cost-effective and safe treatments. The effective application of prior authorization removes unnecessary procedures and medications, which then complements the bigger value-based care goals of improved patient outcomes and reduced health costs.

On another note, prior authorization also ensures that there is care planning based on proven, evidence-based practices, which aligns with the VBC model’s intent to deliver care at the right time and in the right dose.

Although some payers find the prior authorization process cumbersome, insurers claim that it actually works in favor of VBC goals by requiring providers to keep care aligned with clinical guidelines and to make more rational decisions.

Challenges of Prior Authorization in Value-Based Care

1) Administrative Burden on Providers

Among other criticisms, prior authorization has been condemned for placing administrative burdens on healthcare providers. Physicians and their teams, for instance, take too much time trying to avoid or seek prior authorization, get in queues waiting for responses, and deal with denials.

A survey by GAO in 2018, and they found that 91% of the providers believed that prior authorization negatively impacts the outcome of patients and with time the AMA survey of 2023 shows almost the same results. With an average of 14.9 hours per week, these activities occupy the attention of any care provider.

2) Delay in Treatment and Patient Outcomes

Another drawback to the prior authorization process is that it can lead to delayed treatment. In any VBC systems, delivery of care on time is vital in outcomes for the patient. However, delay in giving treatments because of the time taken in processing a prior authorization affects patient care.

3) High Costs

A paper-based prior authorization request may cost a healthcare provider nearly $11 for each transaction. Although electronic systems can reduce this cost, there remain considerable expenses in ensuring that these processes work effectively.

To payers, the cost of managing the prior authorization programs, which is increasingly assumed in large-scale value-based contracts, is a hurdle. Complexity in healthcare processes can lead to inefficiencies, and without automation, they can add administrative overhead, undermining the cost-saving potential of value-based care (VBC).

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Outsourcing Prior Authorization: A Solution for Value-Based Care

Third-party vendors who have experience and knowledge in prior authorization relieve the administrative burden from healthcare providers and make the process much more efficient.

The outsourcing of prior authorization services to experts in the field leaves providers with less time for administrative tasks, devoting their staff to patient care activities. These third-party services usually rely on advanced technologies, such as automation and artificial intelligence, to make approval processes fast, thereby reducing the time taken for necessary authorizations.

Moreover, most outsourcing companies offer cost-effective pricing models, such that healthcare organizations could scale their prior authorization efforts without burdening their internal resources.

For value-based care initiatives, automation of prior authorizations that does not compromise on quality is a game-changer; it prevents delay or denial of care based on those inefficiencies in the process and fosters timely, evidence-based treatment decisions.

Conclusion

Prior authorization in value-based care aids in cost control, quality promotion, and patient safety. However, administrative burden and delay are among the challenges that may undermine the goals of VBC.

We at Sun Knowledge provide end-to-end prior authorization services that are integrated into providers’ workflows to manage claims better and minimize administration slowdown, which are in line with VBC’s objectives.